As rental rates rise in markets around the country, one of the most general discussion topics is rent control. Rent control typically accompanies sharp increases in housing prices, a shortage of affordable rentals, or both. From a tenant’s point of view, the concept of freezing or putting a cap on how much rent they pay may seem tempting. What is rent control, which cities have it, and how does it affect Catonsville rental property owners and landlords? These are concerns that all rental property owners need to know the answers to in order to take an educated stance.
What is Rent Control?
Accordingly, rent control laws are government regulations that limit how much a rental property owner or landlord can charge to lease a home. The basic principle behind rent control is to keep living costs inexpensive for a certain city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control has existed for a long time now, starting in the 1920s and seeing a resurgence in the 1970s. One of the most consistent and interesting examples of rent control in action is New York City, which has two individual rent control programs dating back to the early 70s. The first program is limited to renters who have resided in their rental homes since 1971, and the other restricts the number of times rents can be increased. This second regulation pertains to around half of the rentals in the city. However, critics argue that the high cost of rent in New York City (rent is typically close to $3,000 a month for a small apartment) is proof that rent control is not working.
Pros and Cons for Landlords
Now, around 180 municipalities in the U.S. currently have rent control regulations, including but not limited to New York, New Jersey, California, Maryland, Oregon, and Washington, D.C. Each city has a slightly different approach to rent control, from capping rental rates to limiting increases and paying a renter to move. But there are many other localities where the merits of rent control laws are being debated.
From a landlord’s perspective, the advantages of rent control concentrate on tenant turnover and decreasing competition in the rental market. For instance, if a renter realizes that their rent will remain the same for a given period, they are much more willing to stay in their rental home long-term. This can greatly decrease turnover costs for property owners. Rent control also tends to deter the growth of multifamily rental units in certain areas, which could help existing rental property owners. Without the competition of new apartments in the area, single-family rental property owners can locate and retain tenants for their rentals easily.
Certainly, these benefits accompany a list of downsides for landlords, too. For instance, by imposing limits on rent increases or rental rates, rent control laws may stop property owners from maximizing their profit potential. Another major downside to rent control is that bad tenants won’t want to move. If they are problematic but not quite in violation of their lease, this could bring about some long-term misery dealing with them month after month. Even though they have clear lease violations, a lengthy eviction process is much more possible if a tenant does not want to move.
The inability to raise rents could make it tougher for property owners to meet rising expenses, like property taxes or insurance. Critics argue that such problems are often not taken into account when cities start thinking about passing rent control laws.
Whether your rental properties are subject to rent control laws or not, you can trust Real Property Management Metro to help you keep your rental income competitive and profitable. To learn more about what we have to offer, contact us online today!
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